Economy: at a loss for reforms

WEB DESK:Critics are getting harsh over the PML-N governments weakness in instituting substantive economic reforms. The recently-released fifth report on PML-Ns economic agenda by the Islamabad-based think-tank Prime was not kind either (take a cue from its title, “PML-N: Loosing all its marbles”).

During the period spanning Jan-Jun 2015, the PML-N governments economic management barely passed with 51 percent score. If Prime were an academy, the series of low scores might have PML-N flunked out by now.

For the uninitiated, Prime has looked at progress on some 92 economic targets gleaned from the PML-N manifesto. There are three broad areas: Economic Revival (57 targets), Energy Security (32 targets) and Social Protection (3 targets). Targets are scored from 0 (lowest) to 10 (highest) as per Primes analysis of headway in key areas of policy and legislative development, institutional reforms, and implementation. (See “PML-Ns subpar report card,” published July 25, 2014 for our take on Primes methodology).

As in the previous issues, the three “social protection” targets took the government beyond the passing threshold this time as well. Its score of 7.3/10 is the highest in the five reports so far, as the government stepped up its funding to eventually spend 2 percent of GDP on social protection.

But the real economic picture emerges when one looks at core economic areas where private sector is involved, not public handouts. Here, both the Energy Security and Economic Revival indicators, which form the bulk of the analysis, are faltering.

Economic Revival, which received an average score of 4.6 and 4.33 in the last two trackers, was rated low at 3.8 in the current report. Just about 30 percent of indicators here received passing score (that is, 5 and above), and the ones that did are mostly related to development in infrastructure, especially related to CPEC. Two years on, two targets have been secured: inflation, and tax directory publication.

Energy Security got a score of 4.4, which is marginally lower than the previous reading, albeit higher than the earlier ones. Here, too, round about a third of indicators got ahead of the passing line. Saving the day here were measures like policy impetus for renewable energy, annulment of Discos cross-subsidy, and launch of LNG terminal. Only three energy-related manifesto targets have been sealed so far: power tariff notification as per system-wide cost, ban on new CNG pumps, and CNG priority use in public transport.

The overall scorecard isn satisfactory in Primes analysis. The reports authors even cast aspersion on the few targets that were achieved, terming this relative progress “cosmetic”. However, the tone, at times, turned unusually populist for a buttoned-up report. The indictment seemed ominous when the authors opened the report by observing that “(the) first two years of the PML-N government have already been lost to the dustbin of history.”

Regardless of the apparent tinge of cynicism, the authors positively exhort the government managers to “re-read” their 2013 election

manifesto. They feel that “its not yet too late to mend” and the government mustn let “short-sighted gains” come in the way of the overdue economic reforms.

One couldn agree more. Prime Minister Nawaz Sharif should find himself a stronger authority today, with questions over his mandate put to bed following the judicial commissions ruling. In fact, PM Nawaz is now among those rare political leaders who miraculously got their political capital restored midway through the term. This sort of renewal must be put to good use.

Perhaps he needs to consult the party manifesto himself and get necessary adjustments made. It should be clear that the current window of opportunity – brought forth by macroeconomic stability, relative political normalcy, rising consumer confidence, and a much-improved security situation – would be a terrible thing to lose by napping on reforms.